EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
JUNE 2014
AMERICAN COUNCIL ON RENEWABLE ENERGY (ACORE)
ACORE, a 501(c)(3) non‐profit membership organization, is dedicated to building a secure and prosperous America with clean, renewable energy. ACORE seeks to advance renewable energy through finance, policy, technology, and market development and is concentrating its member focus in 2014 on National Defense & Security, Power Generation & Infrastructure, and Transportation. Additional information is available at: www.acore.org
POWER GENERATION & INFRASTRUCTURE INITIATIVE
Power Generation & Infrastructure Initiative brings together leaders from the utility, business, investment, regulatory, public and non‐profit sectors to: (1) examine the challenges, opportunities and appropriate strategies related to the expanded use and effective integration of renewable energy in the power generation sector; and (2) explore 21st century business models that will allow for this renewable energy scale‐up. Additional information is available at: www.acore.org/programs/member‐initiatives/power‐generation
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© 2014 ACORE
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American Council On Renewable Energy (ACORE) 1600 K St. NW, Suite 650 Washington, DC 20006 202.393.0001
Questions or Comments: [email protected]
1 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
POWER GENERATION & INFRASTRUCTURE INITIATIVE ADVISORY COMMITTEE AUTHORS
ACORE Abengoa Solar American Clean Energy RES Americas Todd Foley, James Hewett, Paper Co‐Authored by Steve Morgan Shalini Ramanathan Lesley Hunter, and Concentrating Solar Power Michael Brower Alliance and Perkins Coie LLP Fred Morse (Abengoa), Kate Maracas, Frank (Tex) Wilkins, and Arthur Haubenstock
Scott Madden, Inc. Siemens Smart Grid Sullivan & Worcester LLP Chris Vlahoplus, Cristin Lyons, Services Jim Wrathall, Elias Hinckley and Paul Quinlan Chris King and John Frenkil
POWER GENERATION & INFRASTRUCTURE INITIATIVE SPONSORS
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TABLE OF CONTENTS
Executive Summary ...... 4 Evolving Business Models for Renewable Energy ...... 5 Renewable Energy Drivers of Change and Overview of Actions from the Utility Perspective, Scott Madden, Inc...... 5 Distributed Energy: Understanding and Mitigating Commercial and Regulatory Risks, Sullivan & Worcester, LLP ...... 11 Revisiting the Electricity System: Leveraging Distributed Generation, American Clean Energy ...... 15 Role of Industrial and Commercial Energy Users in Changing Utility Business Models, RES Americas ...... 20 Market Spotlights ...... 24 Grid Integration Challenges and the Role of Concentrating Solar Power, Concentrating Solar Power Alliance, Perkins Coie, LLP and Abengoa Solar ...... 24 Electric Vehicles: Flexibility, Creativity, and Profit Potential for Utilities, Siemens Smart Grid Services ...... 28
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EXECUTIVE SUMMARY
Renewable energy continues to grow as a share of challenges, opportunities and appropriate strategies our nation’s overall electricity portfolio, now related to the expanded use and effective responsible for 14% of total U.S. power generation. integration of renewable energy in the power A combination of private sector ingenuity, generation sector; and (2) explores 21st century investment and government policy certainty have business models that will allow for this renewable driven significant cost reductions, technology energy scale up. improvements, and scale up of the renewable energy industry over the past several years. In 2013, PURPOSE OF THIS REPORT nearly 40% of all new U.S. electricity generating This Industry Review explores key issues and capacity came from renewable energy. provides recommendations related to the evolving At the same time, developments in natural gas power sector and increased use of renewable extraction offer game‐changing, but highly water‐ energy, particularly related to distributed generation intensive opportunities; stringent environmental and the effective integration of advanced grid standards raise performance requirements; the technologies such as smart grids and microgrids. This central coal and nuclear generation fleet is rapidly report provides a series of industry perspectives with aging, foretelling a very costly replacement scenario; useful analysis, data, and insight for renewable and the transmission and distribution systems energy and utility stakeholders, including: require expansion and upgrade. An updated policy Insight into how distributed generation and framework and significant capital investment are advanced grid technologies are changing the required to modernize the power generation sector power generation sector and traditional utility and assure reliable service. Technological business models innovations, regional differences in resource availability, the changing nature of customer Suggested outcomes for the successful relations and use patterns, emerging financing integration of renewable energy at scale structures, the electrification of the transportation sector, and a murky policy certainty outlook present Spotlights on how CSP and EVs are changing the challenges and opportunities for this sector. way utilities look at generation, integration, and storage Building on the considerable progress power generation companies across the U.S. are making to A group of prominent renewable energy developers, integrate renewable energy, ACORE’s Power professional service firms, energy service companies, Generation and Infrastructure Initiative brings and other groups authored the six articles in this together leaders from the utility, business and Review. investment, regulatory, public, and non‐profit sectors to define a viable architecture for the scale The views and opinions expressed in this report are up and systems integration of renewable energy those of the authors and do not necessarily reflect resources. The collaboration: (1) examines the the views of ACORE. .
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RENEWABLE ENERGY DRIVERS OF CHANGE AND OVERVIEW OF ACTIONS FROM THE UTILITY PERSPECTIVE
Chris Vlahoplus, Cristin Lyons, and Paul Quinlan Scott Madden, Inc.
Renewable generation resources, coupled with the Initiatives Task Force (EITF), have taken a innovation of enabling technology on the conservative approach to state regulatory risk by distribution grid, are creating the potential for including requirements in requests for proposals disruptive change for electric utilities. While utility‐ (RFPs) that the bidder comply with all state utility scale renewable strategies can be similar to laws. Understanding the nuances of state regulation traditional utility‐scale generation (i.e., large‐scale may provide an opportunity for power purchase assets with purchase power agreements (PPAs)), the agreements (PPAs) to be executed that might utility business model may face significant changes otherwise not be considered readily feasible. from customer‐sited distributed resources, especially distributed solar photovoltaics (PV). Federal regulation of public utilities by the Federal Energy Regulatory Commission (FERC) is relatively Utilities’ responses to distributed generation have well‐understood, and therefore is not the focus of varied, ranging from financing projects outside of this article. the service territory to owning and operating distributed generation within the service territory. DRIVERS OF CHANGE Regardless of direction, utilities are faced with the Resources that have the potential to shift the utility need to rethink how distributed resources affect business model are generally appearing on the their approach to: real‐time operations; system customer side of the meter and providing utility planning; customer engagement; and strategy, customers with alternatives to supply their regulatory, financial, and stakeholder management. electricity needs that did not previously exist. In response, utilities should take proactive action to: Principal self‐supply energy resources include solar Renew the regulatory compact PV, combined heat and power (CHP), demand Market, test, or pilot alternative resources response, and microgrids. The primary drivers Define adjustments to the operating model propelling the growth of distributed generation Define adjustments to the business model resources include:
Despite some rhetoric to the contrary, utilities will Technology and Distributed Generation continue to exist and play a vital role in providing Advances: Advances in PV technology, coupled valuable services to customers. Therefore, utilities with commodity price declines, are introducing must have room to become valuable partners to unprecedented levels of non‐traditional ensure that distributed generation becomes a long‐ generation to the grid. In addition, distribution term, positive enhancement of the electric grid. automation, advanced and aggregated demand response, energy efficiency, and automated In renewable energy project development, metering infrastructure are improving the regulatory risk can often be one of the more reliability and efficiency of the grid. frustrating issues that renewable energy developers must address. To date, U.S. Department of Defense Public Policy and Regulatory Support: Policies (DoD) officials, in particular, the U.S. Army Energy driving adoption include net metering,
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renewable portfolio standards with EXHIBIT 1: PROSPECTS FOR DISTRIBUTED GENERATION distributed generation requirements, authorization to allow third‐party ownership models, and incentives. States are beginning to explore these dynamics and their impact on electric utilities and customers. Policies built around the “value of solar” or other distributed generation may become more prevalent and may replace net metering. Regulators are also encouraging utilities to explore advanced technologies and new business the long‐haul transmission. The issues range from models. Examples of these efforts include the strategic to tactical, for example: Minnesota’s value of solar, grid modernization Third‐party sales of electricity may displace the in Massachusetts, and “utility of the future” utility’s role with the retail customer. discussions in Maryland and New York. Microgrids introduce the question of franchise Customer Preference: Businesses are rights and the definition of a utility. demonstrating a growing interest in incorporating distributed generation in their Utilities may need to upgrade distribution energy supply. For example, Walmart generates infrastructure (relaying, reclosers, conductors, 1% of its electricity or 174 GWh per year from and transformers) to accommodate two‐way 1 on‐site biogas, solar, and wind. In addition, power flows that come from these installations. residential customers are considering distributed generation in growing numbers as The utility needs to be able to “see” where costs continue to decline. Demographics will resources are located on the grid and manage increase this trend as younger customers have intermittency at the distribution level. stronger preferences for green solutions. Distributed resources and demand response The adoption and impact of these drivers will not be have the potential to change the load curve of a consistent across the United States. Instead, states utility in specific networks in the distribution with more favorable environments (e.g., more system. lucrative net metering, third‐party solar leasing and Due to net metering provisions, distributed PPAs, higher electricity prices, etc.) are more likely to generation customers may not participate fully have a significant influx of distributed resources. The in paying for the distribution upgrades required majority of these states are in the northeast and to interconnect their rooftop solar installation. southwest. Some argue that cross‐subsidization of rate ISSUES AND CONSEQUENCES classes is taking place in the deployment of Distributed resources introduce complexity to distributed generation (beyond existing cross‐ traditional model of central‐station generation and subsidization of low‐income and between other
1 U.S. EPA, “Top 30 On‐site Generation, Revised January 27, 2014,” http://www.epa.gov/greenpower/toplists/top30onsite.htm
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rate classes, i.e. between industrial, commercial services, while IES remains the owner of the and residential). solar assets.
Large corporations, which are utilities’ largest Provide “Green” Options to Customers: Utilities customers, are facing pressure from produced may meet customer needs by providing products and services. community solar initiatives or green rates. For example, Salt River Project offers customers TODAY’S UTILITY ACTIVITY access to a 20 MW community solar project. Meanwhile, Duke Energy, NV Energy, Dominion, Utilities are contemplating the degree to which they Georgia Power, and others provide credits or want to own or operate distributed generation tariffs for customers to purchase renewable assets. There is particular interest in solar PV assets energy, thereby eliminating the need for and that is the focus of this section. Approaches to customer‐sited infrastructure from their this technology fall broadly into the following perspective. The utility benefits because these categories: resources are generally utility‐scale and have Finance Outside of Service Territory: minimal impact on the distribution system. Companies may pursue opportunities by Own/Operate within Service Territory: Utility‐ providing project financing or equity owned distributed solar may become a investments in companies. In 2010, Pacific regulated asset within a company’s service Energy Capital (a subsidiary of PG&E) agreed to territory. This approach mitigates issues related fund SolarCity to install solar on homes and to net metering while providing operational businesses. Examples of equity investments, benefits, as the utility can potentially site the which appear to be the preferred approach in solar in the part of the system best equipped to recent years, include Duke Energy’s investment accommodate it, and where it may help solve in Clean Power Finance and Edison congestion or reliability issues. Dominion is International’s acquisition of solar installer testing utility‐owned distributed solar in a 30 SoCore Energy. MW pilot program. Own/Operate Outside of Service Territory: In addition, some utilities have begun to Numerous utilities have invested in utility‐scale contemplate a role akin to a distributed regional solar outside of their service territories to learn transmission organization (RTO). In this scenario, the about the technology while potentially utility becomes a manager of transactions across a increasing earnings. Direct ownership of diverse set of resources including distributed distributed solar has been more limited. generation, demand response, energy efficiency, and However, Integrys announced in January 2014 customer loads. This model presupposes changes to that its subsidiary, Integrys Energy Services (IES), rate design and significant advances in utility would invest $40 to $50 million per year in operations. commercial and residential solar. Clean Power Finance will provide origination and operation
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EXHIBIT 2: BENEFITS AND CHALLENGES OF CURRENT UTILITY ACTIVITY Types of Utility Benefits Challenges Involvement
Finance Outside of Allows for participation in growing market Technologies and Service Territory and potential return on investment through regulations outside of the direct (energy revenues, renewable energy service territory may not certificates) and indirect benefits (tax credits, provide adequate knowledge Own/Operate Outside diversification) transfer for future service of Service Territory Facilitates an understanding of technology territory installs and market considerations
Provide “Green” Provides an opportunity to gain first‐hand Requires larger investment Options to Customers knowledge of how to maximize resource in capital and resources to value acquire and manage Understanding technology may provide Needs to be coordinated Own/Operate within ancillary benefits (e.g., voltage regulation) with other facets of the Service Territory More likely to be eligible for rate recovery company
OVERVIEW OF UTILITY COURSES OF ACTION Creating grid‐reliability interconnect and operating protocols A utility should begin by evaluating the potential market size of distributed generation in its service Creating flexible tariffs to serve distributed territory. Key drivers will be the local renewable generation customers resources, installation costs, and policy structure. Market Test or Pilot Alternative Resources: With an understanding of the potential market, a Market tests and pilots allow utilities to develop utility should follow the steps below. operational experience with new technologies. Renew the Regulatory Compact: The current Utilities may also test pricing principles through rate model was designed for a different market experiments and differentiated pricing. environment. The convenience of cost allocation Market tests or pilots within a service territory to a few major rate classes, using volumetric may establish a precedent for full‐scale rates, breaks down in a world of varied and implementation. distributed customers. If distributed resources Define Adjustments to the Operating Model: are to see long‐term, viable penetration, this Utilities will need to refine operating models to model must be rethought. The utility risk profile, account for the lessons learned through market business model, and financial structure all tests and pilots. Key areas of focus include real‐ depend on the regulatory contract. Key actions time operations, system planning, and customer to renew the regulatory compact include: engagement (see exhibit 3). Addressing net metering inequality issues Define Adjustments to the Business Model: Immunizing returns against flat to declining Utilities must also refine business models based consumption through rate decoupling or on the lessons learned from the market test or other mechanisms pilot. Key areas of focus include strategy, regulatory, financial, and stakeholder Protecting franchise rights and engagement (see exhibit 4). responsibilities
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EXHIBIT 3: OPERATING MODEL ADJUSTMENTS
Areas of Implications Considerations Concern
Real‐Time A market test or pilot will Consider expanded, more granular visualization Operations allow operators to see and tools operate new resources Determine how coordination with non‐utility entities connected to the grid that operate assets should work Protocols dictating the availability of resources may become important if they are to be relied upon by operations
System Central station generation Models need to account for new resources Planning and long‐haul transmission Location and time are now important variables and planning will need to need to be considered both in transmission and incorporate a market test distribution or pilot
Customer A market test or pilot The utility will be called upon to interconnect to Engagement allows utilities to provide various entities; the roles and responsibilities in that customers new services interface need to be clear Customers may require additional types of service
EXHIBIT 4: BUSINESS MODEL ADJUSTMENTS
Areas of Implications Considerations Concern
Strategy The utility will face The utility needs to consider which businesses it competition and loss of wants to be in revenue Is there an opportunity to become the “single point Alternative business of contact” to the customer? opportunities may exist Are there other lines of businesses the utility should enter?
Regulatory Utility loads will decline Consider rate decoupling, riders, and other with the influx of strategies to protect revenues today resources; the existing Open the dialogue with the regulator on changes to rate construct may be the business model and the “value of the grid” insufficient to address Consider further bifurcation of customers and rate declining demand growth classes and customer generation
Financial Customers are using less Clarify approach to net metering electricity or self‐ Consider new growth strategies (e.g., electrification supplying of infrastructure, etc.)
Stakeholder A strategy to manage all The utility needs to manage and communicate to all Management stakeholders will be stakeholders through transition critical This approach should be coordinated with other strategies
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Despite some rhetoric to the contrary, utilities will Cristin Lyons is a partner and leads the firm’s continue to exist and play a vital role in providing transmission, distribution, and Smart Grid practice. valuable services to customers. Therefore, utilities She joined the firm in 1999 and has since consulted must have room to become valuable partners if we with a myriad of clients on issues ranging from are to ensure that distributed generation becomes a merger integration to project and program long‐term, positive enhancement of the electric grid. management. Cristin earned an M.B.A. from Southern Methodist University and a B.A. in political ABOUT THE AUTHOR science and Spanish from Gettysburg College.
Chris Vlahoplus is a partner and leads the firm’s Paul Quinlan is a Clean Tech Specialist with the firm’s clean tech and sustainability practice. He has been a clean tech and sustainability practice. He earned a management consultant to the energy and utility master of public policy and a master of industry for more than 20 years. Chris earned an environmental management from Duke University M.B.A. from the University of North Carolina at and a B.S. from the University of Notre Dame. Chapel Hill and an M.S. in nuclear engineering from the Massachusetts Institute of Technology.
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DISTRIBUTED ENERGY: UNDERSTANDING AND MITIGATING COMMERCIAL AND REGULATORY RISKS
Jim Wrathall, Elias Hinckley and John Frenkil Sullivan & Worcester, LLP
Improving technology, combined with higher costs substantially in the market for commercial and of traditional grid‐delivered electricity and industrial DER systems ranging from 1 megawatt increasingly stringent environmental requirements, (MW) to 3 MW in scale. For example, distributed have created new opportunities for on‐site power solar energy capacity was the third largest source of and other distributed energy resources (DER). new generation in 2013, and is expected to grow at a rate of 22% annually through 2020.3 While solar PV According to the U.S. Energy Information has been at the forefront, the DER opportunity is Administration, 42 gigawatts (GW) of new peak much larger than solar, encompassing a variety of power generation capacity will be needed in the distributed generation technologies, including 2 next twenty years. Much of this capacity will be modular wind, combined heat and power, biomass, met with DER, driven by energy consumers seeking biogas, fuel cells and micro‐turbines, as well as, improved performance, reliability, power quality, other resources such as energy storage, microgrids, and cost savings. Several Fortune 100 companies, demand response, and advanced energy including Wal‐Mart, Google and Apple, have management information technologies. committed to supplying all of their energy needs through renewable energy resources. On the other hand, electric utilities and broader national organizations have increasingly sought to A number of states are pursuing aggressive restrict and impose additional financial charges on programs providing incentives and regulatory DER. They argue that consumers obtaining power reforms supporting adoption of DER. Most recently, through their own generation assets are not paying on April 25, 2014, New York State Governor Andrew enough for general grid services. Cuomo announced that the N.Y. Public Service Commission will overhaul the state’s energy market The shift toward DER is creating major opportunities regulations with the goal of increasing distributed for investors, although in a context of increasing generation, smart grid, and demand response uncertainty. Innovative financial models can be used technologies. Public utility commissions in California, to structure DER investments, particularly those Arizona, Colorado, Minnesota, Florida, Hawaii, and focused on aggregating pools of assets for Iowa have open dockets addressing DER adoption investment and securitization. Given the and related ratemaking issues. complexities of DER and the changing regulatory and market landscape, identifying risks and opportunities These market and policy dynamics are leading to to mitigate these risks will be increasingly important increased adoption of DER. Growth has accelerated in the context of DER investments.
2 3 Edison Electric Institute, Disruptive Challenges: Financial http://www.eia.gov/oiaf/aeo/tablebrowser/#release=AEO2014&s Implications and Strategic Challenges to a Changing Retail Electric ubject=0‐AEO2014&table=9‐AEO2014®ion=0‐ Business, Jan. 2014 (citing Bloomberg New Energy Finance). 0&cases=full2013full‐d102312a,ref2014‐d102413a
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RISK CATEGORIES IN DISTRIBUTED ENERGY and if the sponsors are relied on, including for TRANSACTIONS ongoing operations and maintenance, these risks become more important. Distributed resource investments bring unique areas of risk. A number of these types of risks are 4. Credit Risk: Where returns are to be provided commercial in nature, and will be addressed through an arrangement with the counter‐party primarily on the business side of the transaction. to purchase and take the power produced, the Other types of risk are structural and regulatory in terms and conditions of the off‐take agreement nature and will generally be handled with will be critically important. In debt transactions, contractual provisions. the lender also may take a security interest in the supplied power and resulting cash flows. Commercial Risks Regulatory Risks A key initial issue is the proposed structure of the DER investment. Financing may either be directly Distributed generation projects are structured within provided to the project site owner or to third‐party a complex system of state and federal regulatory providers. Transactions may employ a mix of non‐ requirements. Each state regulates power recourse debt, tax‐equity financing, and equity. generation and utility interconnection and off‐take Sponsors are able to achieve performance separately. Achieving financeable and successful advantages and cost savings through a portfolio transactions requires a clear understanding of these approach, and can effectively monetize the regulatory matters. economic benefits realized through government For example, a key question for a DER investment is incentives, tax credits, and depreciation. Portfolios whether the project would be located in states that and the associated revenue streams can then be permit third‐party leasing of on‐site energy packaged, securitized, and offered to investors. Each resources – referred to as “retail choice” programs. transaction model must be evaluated in considering Currently, such programs are allowed in twenty‐ the potential risks and expected upside. three states and the District of Columbia. In states Particularly in the context of third‐party financing, where retail choice is not authorized by statute, there are a number of significant categories of third‐party financing is not an option, and project commercial risks, including: proponents may be required to enter into direct discussions with regulators to obtain necessary 1. Technology Risks: Understanding the expected approvals for DER transactions. performance and reliability of the proposed technical solution is critically important. This Federal and state financial incentive programs also includes both the direct operation of generating must be fully considered. The specific terms of the assets as well as related remote sensing and applicable net‐metering or feed‐in tariff provisions information technologies. will greatly impact the economics of the transaction. Several states have passed legislation authorizing 2. Developer Qualifications: The history and programs such as Property Assessed Clean Energy capabilities of the project developer can make and on‐bill financing. These programs have the difference in achieving a successful substantial impacts on investment risk profiles. outcome. Another issue is the ability to monetize renewable energy credits (RECs) and the potential for changes 3. Sponsor Risk: The duties and capabilities of the in REC values over time. In a number of states, sponsors/hosts of the project assets should be renewable portfolio standards are under attack by assessed. If the underlying assets must be opponents seeking repeal. In those states, the risk of accessed over time for maintenance purposes,
12 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW a change in law could have a significant impact on equipment selection, design, engineering, reliability, the value of RECs. and system degradation projections; installation quality control historical data; operations and Finally, as the industry itself has recognized, the maintenance provider and agreement terms; adoption of distributed energy resources is inspection reports from site visits at selected challenging the electric utility industry business representative facilities; performance of sponsor 4 model. Some utilities and companies involved in portfolios in prior DER investment transactions; and fossil fuel‐related sectors are responding to these warranties, performance guarantees, and insurance. developments in ratemaking cases, requesting modified rate structures that require DER users to Potential investors and their counsel should consider pay additional amounts to cover “grid services” and retaining independent technical and engineering “stand by” and backup services. Also, DER consultants to aid in designing and conducting due opponents are increasingly seeking repeal or diligence reviews. These experts can be particularly modification of the underlying legislation creating helpful in assessing the reasonableness and renewable and DER value streams, such as state uncertainty of power generation forecasts, cost renewable portfolio standards (RPS) and tax credit assumptions and projections, and review of the programs. The potential for future changes in law O&M plans. and the extent of resulting impacts on DER financial returns should be carefully assessed. Similar due diligence models will need to be developed for other DER technology portfolios, DUE DILIGENCE AND CONTRACT including fuel cells, modular wind, and FRAMEWORKS IN DISTRIBUTED GENERATION biogas/biomass applications. Increasing TRANSACTIONS standardization will be important as the markets for DER projects employing these technologies mature. Investing in aggregated pools of distributed generation assets poses unique transactional The capability to standardize the due diligence challenges. Comprehensive due diligence, including process and provide effective reviews in a cost‐ inspections of each operating installation, may not effective manner will be a key to increased be cost‐effective. In these kinds of projects, the goal investment in DER. The ultimate goal is development is to design and implement due diligence reviews and application of due diligence templates that will that are sufficiently representative to achieve overall reliably achieve the assessment of the significant risk assessment, at a level of expense that is variables in a DER portfolio transaction. consistent with the returns offered by the proposed Unlocking the value in distributed resources investment. investments requires a unique blend of creativity Key items for review include the investment financial and standardization. A typical deal package might model; applicable regulatory framework affecting include some combination of the following: interconnection, off‐take and pricing, as well as Project company documents and equity potential for future modifications to that framework; agreements whether the project developer has provided consistent and uniform documentation of the Loan and credit agreements underlying contractual arrangements, including off‐ take and interconnection agreements; structure age Tax equity agreements and physical condition, ownership, and security of Developer agreements the assets; resource forecast data and methodology;
4 Id.
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Lease agreements clean energy and cleantech leader for two AmLaw 100 law firms. He also is a professor of Power purchase agreements international energy policy, a regular contributor to several energy forums and frequent speaker REC ownership on energy policy and finance. Collateral security agreements Mr. Wrathall’s practice includes energy and Revenue distribution waterfall environmental policy matters and transactions. Prior to joining S&W in late 2011, he had over O&M and backup service agreements two decades of experience with AmLaw 20 law firms and served as Senior Counsel with the U.S. Insurance policies Environment and Public Works Committee from The nature, scope, and structure of each project will 2007 through 2011, handling clean energy and necessarily determine the precise contract climate change legislation and oversight framework. Early and careful strategic assessment, activities. and creative use and modification of the available Mr. Frenkil is an energy finance attorney contract structures, will be critically important to focusing on the representation of lenders, equity mitigating the project and regulatory risks, and investors and developers in domestic and achieving successful financial outcomes. international energy projects. Prior to joining ABOUT THE AUTHOR S&W, he represented energy clients in the Los Angeles office a major international law firm. Jim Wrathall is a counsel, Elias Hinckley a partner S&W’s Energy Finance Practice designs solutions for and David John Frenkil an associate with the Energy complex financing challenges, including the Finance Practice Group of Sullivan & Worcester LLP. integration of new technologies and related financial In addition to heading S&W’s Energy Finance innovation for the power generation industry, as well Practice, Mr. Hinckley has been the leader of the as the deployment and commercialization of alternative energy practice for one of the world’s advanced energy technologies and distributed largest professional services firms as well as the generation projects.
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REVISITING THE ELECTRICITY SYSTEM: LEVERAGING DISTRIBUTED GENERATION
Steve Morgan American Clean Energy
A resurgence of the renewable energy industry has During this same period of time, utility deregulation taken place over the last decade, fueled by state or restructuring occurred in 16 states plus D.C., mandates and federal policy incentives, as well as vertically disaggregating the utilities in those significant reductions in project costs. Despite the jurisdictions.6 To further complicate the picture, 34 recession of 2008‐2009, growth in the renewables states and D.C. partially or totally participate in sector particularly accelerated the deployment of organized wholesale markets for electric power wind and solar photovoltaics (PV).5 transactions through a regional transmission operator (RTO) or independent system operator What was once a niche market has grown to become (ISO).7 The upshot of these changes in policy and a business concern for utilities and regulators. regulation has been the return to relying on private However, the intermittency and low‐capacity factors investment for new or replacement generation of wind and solar PV, relative to base‐load thermal assets in most, but not all of the country. power stations, has raised operating concerns. Revenue erosion as customers use less energy and At the same time, uncertainty over future carbon capacity of the grid, or actually generate back into regulations has all but killed new coal‐fired, base‐ the grid, creates concerns for the utility business load construction. Expected future capacity will model. come from natural gas and renewable resources. In 2013, 37% of all new electricity generating capacity THE SHIFTING MARKET AND POLICY came from renewable energy, three times more LANDSCAPE generation capacity than from oil, coal, and nuclear combined. While the bulk of renewable energy Since 1983, 38 states and the District of Columbia additions over the past decade had been from grid‐ have adopted renewable energy targets, 30 of which connected wind, 2013 saw the largest renewable have mandatory compliance requirements and eight power capacity increase from solar PV, both of which have voluntary requirements. In addition, distributed and centralized.8 43 states and D.C. have established various net‐ energy metering (NEM) policies. The RPS The problems attendant to central‐station power requirements are a patchwork of policies that vary sources affect grid‐connected renewable energy from jurisdiction to jurisdiction. Some include all projects as well, including long‐distance transport of forms of renewables, and 10 of them call for set‐ the energy to the load centers. There are substantial aside requirements for solar PV and/or distributed benefits to be derived by placing new renewable generation. sources closer to the loads they serve.
5 Bird, L., J. McLaren, J. Heeter, C. Linvill, J. Shenot, R. Sedano, and www.eia.gov/cneaf/electricity/page/restructuring/restructure_el J. Migden‐Ostrander. Regulatory Considerations Associated with ect.html the Expanded Adoption of Distributed Solar. (2013). 7 AD10, Organized Wholesale Power Markets. "137 FERC¶ 61,064 6 Council, Interstate Renewable Energy . Status of Electricity UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY Restructuring by State. EIA. 2014. COMMISSION." 8 Solar Market Insight Report 2013 Year in Review. SEIA. 2014
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THE POWER MARKET TODAY: A NEW, OLD and inability to monetize the value that distributed MODEL generation resources bring to the grid.
Solar PV penetration has grown from virtually Many projects sited in the distribution system will be nothing in 2000 to about 12 GW at the end of 2013.9 below 1 MW of capacity, limited by both space and While many of the previous additions have been customer load as well as distribution system design. large‐scale, grid‐connected projects, smaller, There has been some concern that projects of this distributed solar PV is expected to make up the size cannot scale because the project finance model majority of additions in coming years. generates a high cost of capital and legal expenses, making development economically unattractive. The pace of deployment has been driven by various Given the relatively low penetration rates thus far state and federal incentives available to developers and the raging debate over new financing tools, one and owners. However, growth is increasingly driven must conclude that there is some merit to this by solar PV cost reductions. Since 2007, PV panel argument. prices have fallen over 80%. Solar panels can be purchased in volume at about $0.70 per watt However, economies of both scale and scope can be delivered, and continued price pressures are created once a substantial pipeline of projects is expected into the future. established. There are economies that come from both the supply chain as well as lessons learned from Total installed costs range from $2.30‐4.00 per watt, replication, and most economies are yet to be and little has been done to reduce the balance of achieved in this market. Although, achievement of systems or financing costs for PV systems.10 these benefits cannot be realized without a better However, at existing developed costs, assuming a funding vehicle than is now in place. 30‐year life and a conservative estimate of future operations and maintenance (O&M), the U.S. Energy Tax equity financing has been an essential tool in the Information Administration (EIA) calculates the financing of projects to date. The explosion in solar levelized cost of energy (LCOE) to be around deployments in 2010‐2012 was, at least in part, the $0.13/kWh.11 Market bids have also come in around result of the conversion of incentives into cash $0.08/kWh all‐in, making the LCOE comparable to payments under the 1603 federal cash grant pre‐recession, wholesale power pricing. Even at the program implemented to compensate for the crash higher, more conservative estimate of the U.S. EIA, of the tax equity market following the 2008‐2009 LCOE is below existing retail rates in high‐cost states financial crisis. The tax equity market has returned to like New Jersey, New York and California. Then what pre‐crisis levels but the limited availability of tax‐ is preventing rapid deployment of distributed solar equity investors and the high cost of capital they generation, particularly in high‐cost service areas? command will limit the industry’s growth trajectory.
The barriers are numerous, but the most significant The rapid growth of the electric utility industry in the are the balkanization of markets, uncertainty of post‐World War II era relied upon the ability of policy, over‐reliance on tax‐equity financing and utilities to securitize their capital additions. Access to project finance, and a general lack of understanding stable, predictable, long‐term sources of funding can have a similar impact on the emergence of the distributed generation market. But the ability to
9 Solar, U. S. "TRENDS 2012." (2013)., www.irecusa./publications 11 "U.S. Energy Information Administration ‐ EIA ‐ Independent 10 Feldman, David, G. Barbose, R. Margolis, R. Wiser, N. Statistics and Analysis." U.S. Energy Information Administration Darghouth, and A. Goodrich. Photovoltaic (PV) pricing trends: (EIA). N.p., n.d. Web. Apr. 2014. historical, recent, and near‐term projections. No. DOE/GO‐
16 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW finance future projects with bond proceeds is Laboratory (NREL) report, Renewable Electricity generally limited to a very few large developers. Futures Study, concluded that: “The central Utilities are in a position to access these capital conclusion of the analysis is that renewable markets at a cost and tenor that can make the electricity generation from technologies that are deployment of distributed generation grow. After all, commercially available today, in combination with a these resources are long‐lived, utility‐like assets with more flexible electric system, is more than adequate proven and predictable operating characteristics and to supply 80% of total U.S. electricity generation in lives. 2050 while meeting electricity demand on an hourly basis in every region of the United States.”12 Present history in the solar renewable marketplace suggests that most hosts prefer to acquire solar Will there be changes and adaptations required? energy through a power purchase agreement (PPA), Certainly, but the challenges can be met and do not wherein they get stable, predictable, long‐term require unknown or unavailable technology for pricing for electricity without the burdens of upfront success. capital or future O&M costs. This suggests that those familiar with owning and operating long‐lived assets What about customer objections to utility‐owned are best positioned to take advantage of the market and operated assets? From my experience, development phase of growth. customer dissatisfaction stems from two main sources: price and availability. Customer In order for this suggested model to work, two dissatisfaction over either or both of these issues critical ingredients are required. First, the utility generally translates into a call for “competition” or must be convinced of the value proposition in “control.” moving to a more distributed generation platform. Secondly, the customer must be convinced in the Availability in the utility industry is generally long‐term value proposition in allowing the measured as an average for all customers over a distributed generation on their site/building. year, based on 8,760 hours per year. According to a 2012 report from Lawrence Berkeley National Much of the current policy debate has focused Laboratory (LBNL), the average outage duration and around the elimination of incentives, including net‐ average frequency of outages for U.S. customers is energy metering, largely driven by the concern over increasing at a rate of approximately 2% per year.13 utility revenue erosion as market uptake accelerates. A system that does not achieve 100% availability is We are seeing the evolution of renewable seen as insufficient given the digital age in which we distributed resources in the interconnected grid. The live. While the LBNL report is not conclusive as to the current debate has focused on who wins and who cause of the trend, those in the utility industry know loses? There do not need to be any losers. The that customer perception of reduced challenge is to craft a win‐win framework. reliability/availability has translated into customer and regulatory pressure for change. TRANSITIONING TO FUTURE MODELS To some, that change requires massive new Some suggest that the intermittent nature of solar investment in capacity, which works against the distributed generation will cause operational issues primary concern of price. By some estimates, in the interconnected grid at even modest upwards of $1.5 trillion are needed to bring the penetration levels. The National Renewable Energy system to a level of performance that would satisfy
12 Mai, T., R. Wiser, D. Sandor, G. Brinkman, G. Heath, P. Denholm, NREL/TP‐6A20‐52409‐1. National Renewable Energy Laboratory D. J. Hostick, N. Darghouth, A. Schlosser, and K. (NREL), Golden, CO., 2012. Strzepek. Renewable Electricity Futures Study. Volume 1: 13 Eto, Joseph H. An Examination of Temporal Trends in Electricity Exploration of High‐Penetration Renewable Electricity Futures. No. Reliability Based on Reports from US Electric Utilities. (2013).
17 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW customer demands. What if, instead of spending resources that, particularly given that solar PV is money to reinforce the transmission and distribution competitive with new sources of generation, we systems, we utilized distributed generation simply cannot ignore it. resources and semi‐autonomous “smart grid” architecture to isolate an outage cause to the The intrinsic value of solar PV will be realized when a smallest possible set of affected customers? utility decides to install distributed resources instead of a fossil‐fueled, central‐station generator or a new The Rocky Mountain Institute’s Electricity Innovation transmission line to eliminate or reduce congestion. Lab issued a report summarizing the known body of Assuming a utility must make an investment in new work on solar PV benefits and costs.14 In all, 15 generation, transmission, or distribution capacity to cost/benefit studies undertaken by regulatory serve its load growth or replace retiring facilities, the bodies, electric utilities, national labs, or other customers benefit when that decision is displaced by organizations were reviewed and assessed. distributed generation resources. Of course, this Differences in methodology and assumptions make assumes significant market penetration of direct comparisons of the studies not useful. distributed resources are achieved. However, there were a number of observations that support a view that the benefits of solar PV are net Importantly though, the distributed generation positive. There is general agreement that energy model can be economically attractive in the existing cost reduction, encouraged by less energy grid architecture. The wide development of production, energy loss reduction, and avoided distributed generation resources is an essential, but capacity charges, is possible and fairly easily incomplete solution for the establishment of the grid quantified. Likewise, it is understood that distributed of the future. The addition of “smart” inverters and generation can provide ancillary services to the distributed energy storage promises to take the grid transmission and distribution system by way of to its ultimate performance. Smart inverters, capable reactive supply, voltage regulation, frequency of autonomous or semi‐autonomous operation, response, and congestion reduction, though there is already have the ability to provide volt/var no general agreement as to the value of such regulation and islanding capabilities in the event of services. Other posited benefits such as avoided T&D loss of the grid for outage events. Coupling this infrastructure costs, elimination of criteria capability with distributed energy storage pollutants, water and land use, carbon reduction, technology, whether collocated with distributed jobs and economic growth, national energy security, solar PV or not, effectively makes those resources enhanced reliability and/or resiliency, and fuel price “dispatchable.” The distributed energy storage can hedging are still being debated and are not easily be used to mitigate or eliminate any intermittency, monetized. provide frequency regulation and demand response services, and help load shaping to maximize the The net value noted in the NREL Renewable value of the solar resources. Electricity Futures Study amounted to about $0.28/kWh for distributed PV, which is in the middle In combination, distributed solar PV and distributed of the pack among the other studies. While there energy storage, coupled with smart‐grid enabled continues to be much debate about the proper equipment, can provide significant reduction in both methodologies and assumptions to use in making customer outage frequency and duration, which these calculations, it should be clear that there is helps achieve the long‐sought‐after “self‐healing” sufficient benefit from distributed generation grid.
14 Branker, K. M. J. M., M. J. M. Pathak, and Joshua M. Pearce. "A electricity." Renewable and Sustainable Energy Reviews 15, no. 9 review of solar photovoltaic levelized cost of (2011): 4470‐4482.
18 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
A viable business model already exists. Utility electrification of work, were the reason. The next ownership of these distributed resources obviates 100 years can achieve at least the same benefit, all the need to eliminate balkanized policies, provide the while securing the nation’s economic, energy new or renewed financial incentives, or provide new and environmental security. tools to access capital markets, all the while ensuring rapid deployment and long‐term, stable ownership Using a rate‐based, rate‐of‐return approach and management of the assets for the benefit of the eliminates many of the barriers presently preventing utility, its customers, and ultimately the nation. rapid scaling of renewable distributed resources. Providing the utility with a reasonable return and This is not a call for utilities to become large‐scale earnings on its investment over the asset life, in engineering, procurement, and construction (EPC) return for using its balance sheet to access cheap contractors or to insource the development process. capital markets, is the model that built the existing Just as utilities do not design or construct large‐ grid and provided the energy that fueled our central‐station generation and contract out T&D economic growth. Utilization of this model to build design and construction work, they can rely on the renewable generation and eventually storage already available pool of developers and EPC technologies will allow us to unlock the value of contractors for the essential work. Rather, this is a distributed energy resources in a way that benefits call for them, in exchange for all of the benefits all constituencies – utilities, customers, and enumerated, to bring their financing muscle to the regulators – through stable and affordable energy task of funding build out and to utilize their expertise supply, a more resilient and capable grid for this next in the integration of these assets into the grid of the century, and a safer, cleaner and more secure future. world.
No doubt there are skeptics of such a model, but it is ABOUT THE AUTHOR relevant to point out that over the last 130 years, the electric utility industry has created one of the Steve Morgan is the CEO of American Clean Energy, a greatest machines known to humankind: the New Jersey based solar developer. Prior to forming interconnected grid. Access to readily available and the company in 2009, Mr. Morgan spent 33 years in cheap energy has been the engine of the U.S. the electric utility industry, retiring as the CEO of economy for at least the past 50 years. A look at U.S. Jersey Central Power and Light Company, a EIA data over that period reveals that the “real” subsidiary of FirstEnergy Corporation. He was price of electricity delivered at the end of 2010 was recently elected to the Board of Directors of SEPA the same as it was in 1960. Over that period of time, and has served since 2010 on the Board of ACORE electricity prices were effectively indexed to GDP and is active on a number of other boards in NJ. growth, and the data indicates that productivity More info can be found at www.amcleanenergy.com improvements, brought about through the
19 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
ROLE OF INDUSTRIAL AND COMMERCIAL ENERGY USERS IN CHANGING UTILITY BUSINESS MODELS
Shalini Ramanathan RES Americas
Commercial and industrial electricity users smelters or cement manufacturing plants being built increasingly purchase renewable power to support in the US, retailers’ aggregate loads and tech sustainability targets. Purchases include behind‐the‐ companies’ data centers are significant power meter rooftop solar and financial settlements for customers. What these customers do is important to bulk wind power. The role of electric utilities, the utilities, to IPPs, and to the electricity sector overall. traditional buyers of renewable energy, varies in these transactions. Some commercial or industrial Why might a commercial or industrial customer electricity users work through utilities, while others work with a utility instead of directly procuring directly handle purchases. There are advantages and power? Electricity is a complicated, highly regulated disadvantages to each approach. Utilities will likely business, and, if your business is widgets, you might react to this trend by offering products and services prefer to remain focused on widgets. Unless there is to commercial and industrial users and by changing an existing power management program, living up to the way they charge for grid services. the terms of a power purchase contract may require new expertise and compliance measures. Because a RENEWABLE POWER AND COMMERCIAL AND big retail store or manufacturing plant will likely be INDUSTRIAL USERS connected to the grid, even if it has solar on its roof, it may be easiest to meet all power needs, including For many years, owners of large wind and solar renewable energy, through the local utility. projects had just one type of customer: electric utilities. Now, in addition to selling to utilities, it is Accounting rules may also play a role. Many power possible to sell renewable power directly to large purchasers, whether they are utilities or commercial end‐users of electricity, such as retailers, or industrial users, prefer receiving fixed blocks of manufacturers, or technology companies with large power instead of taking unit‐contingent, data centers. The interaction between independent intermittent power as produced. Structuring a power producers (IPPs), utilities, and commercial power purchase agreement (PPA) to buy fixed blocks and industrial users is changing. The role of utilities of power may make it a derivative instrument, varies in each transaction as new models are triggering complicated mark‐to‐market accounting developed. treatment.
Commercial and industrial users can be major Furthermore, power contracts are long term. While customers for utilities. Retailers’ aggregate loads and wind and solar prices are at all‐time lows, and these technology companies’ data centers are significant technologies are a good hedge against rising power power customers. A large data center, for example, prices, it can be challenging for companies whose may require 80 MW of power, equivalent to the core business is not power to take a long‐term view electricity used by approximately 80,000 average on power price curves in this market. A utility must households.15 Because there are few new aluminum have a long‐term view on power‐price curves, and it
15 John Finnigan, “Big‐Box Retailers Turn To Solar, How Can 2013), http://blogs.edf.org/energyexchange/2013/08/09/big‐box‐ Electric Utilities Adapt?,” Environmental Defense Fund (August 9, retailers‐turn‐to‐solar‐how‐can‐electric‐utilities‐adapt/
20 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW has the ability to socialize the cost of renewable Apple announced earlier this year that its new power among its customer base. Utilities may also sapphire glass manufacturing plant in Arizona be more comfortable stepping into renewable would run fully on clean energy. The company production ownership if required due to has negotiated with the Arizona utility, the Salt counterparty failure to perform under a PPA, a role River Project (SRP), for renewable power supply. that may be too far removed from the core expertise Neither SRP nor Apple have shared details on of commercial and industrial users. how much power the new facility will use, though SRP has recently entered into contracts On the other hand, some commercial and industrial for 75 MW of renewable power.17 energy users may prefer to directly negotiate power purchase contracts with IPPs to secure favorable In a related example, in North Carolina, Apple terms and use the force of their brand and balance and Google have encouraged Duke Energy in sheet to drive down price. Companies such as Apple North Carolina to expand its renewable power and Wal‐Mart, with their strong credit ratings and procurement. Apple has two solar projects of 20 ample cash reserves, are attractive counterparties. MW each that it owns and operates to power its And if a company is using hedges to manage data centers, with only a small role for the exposure to energy inputs, managing obligations utility. Duke Energy won approval from its under a PPA may not require additional staff or regulators in late 2013 to procure more expertise. Direct negotiation with IPPs reduces (if renewable energy, and charge a premium if not eliminates) the need for regulatory approval of necessary to tech companies and others willing purchase agreements, which can introduce to pay the higher price. In this case as in uncertainty into the execution of a deal where the Arizona, tech companies have encouraged the commercial terms have been negotiated. utility to expand its renewable energy offering, while creating a new model that charges those UTILITY ROLES who choose renewable power a higher price if necessary. This addresses concerns about The role of utilities in the commercial or industrial affordability and impact on a utility’s other procurement of renewable power has varied: customers.18 Wal‐Mart has nearly 89 MW of rooftop solar Microsoft signed a contract last year to buy across its facilities and now uses more solar power from a wind project in North Texas.19 The power than 38 U.S. states. Third‐party company will continue to receive electricity grid companies install and maintain most of the solar services from CPS, the municipal‐owned utility systems and sell the power to Wal‐Mart through in San Antonio, for its local data center. The PPAs. These arrangements look a lot like financial settlement contract, which makes the residential solar, with limited roles for utilities.16 new wind project possible and adds to the amount of renewable power on the Texas grid,
16 Tom Randall, “Wal‐Mart Now Draws More Solar Power than 38 18 Katie Fehrenbacher, “Pushed by Internet Companies, Utility US States,” Bloomberg (October 25, 2013), Makes Progress to Sell Clean Power in North Carolina,” Gigaom http://www.bloomberg.com/news/2013‐10‐24/wal‐mart‐now‐ (November 15, 2013), http://gigaom.com/2013/11/15/pushed‐ has‐more‐solar‐than‐38‐u‐s‐states‐drink‐.html by‐internet‐companies‐utility‐makes‐progress‐to‐sell‐clean‐ power‐in‐north‐carolina/ 17 Michael Graham Richard, “Apple Wants Its Massive Arizona Sapphire Plant to Run on Renewable Energy from Day One,” 19 Robert Bernard, “Microsoft Signing Long‐Term Deal to Buy Wind TreeHugger (February 12, 2014), Energy in Texas,” Microsoft (November 4, 2013), http://www.treehugger.com/green‐investments/apple‐wants‐ http://blogs.msdn.com/b/microsoft‐ massive‐arizona‐sapphire‐plant‐run‐renewable‐energy‐day‐ green/archive/2013/11/04/microsoft‐signing‐long‐term‐deal‐to‐ one.html buy‐wind‐energy‐in‐texas.aspx
21 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
allows the company to buy renewable power more clean energy to the grid has a greater from a location that it believes has pricing and environmental impact than do REC purchases. interconnection advantages instead of being limited to the location of its data center. No Additionally, tech companies are sourcing renewable utility is involved in the deal with the IPP, and power for their data centers. These companies, and CPS continues to serve Microsoft in San Antonio. their consumers, know that using digital devices is only renewable if the data centers behind them use WHY THE CHANGE? clean energy.20 The New York Times calculated that, globally, data centers consume 30 billion watts of There are a few reasons behind the changing role of electricity, the equivalent of 30 nuclear power commercial and industrial customers in procuring plants. One quarter to one third of that power usage power directly. First, the emergence of deregulated is tied to U.S. users.21 markets allows for commercial and industrial companies to act as market participants and buy Finally, the dramatic fall in solar prices has led to power to meet their needs. In markets where commercial and industrial users buying power from utilities hold monopolies, direct purchases with IPPs behind‐the‐meter solar installations, similar to can be difficult or even illegal. residential users adopting rooftop solar. The fall in wind power prices makes direct procurement by Second, large companies are greening their power commercial and industrial users attractive in purchases as part of overall sustainability and deregulated markets, where the power added can corporate social responsibility goals. Many have renewable the overall grid without necessarily being adopted climate mitigation or renewable energy delivered to the point of power usage. targets. For example, IKEA has announced that it will use 100% renewable energy by 2020. While many GOING FORWARD companies have met goals by purchasing renewable As commercial and industrial customers step up their renewable power procurement, it will be interesting to see if utilities offer special services to these customers. A utility could, for example, offer to handle power dispatching and market interfacing for a fee. Or a utility could offer solar or wind to its customers to retain them, either competing or collaborating with IPPs. Increases in fixed charges for being connected to the grid (even if a facility has solar installed or procures wind) seem inevitable for commercial, industrial and residential solar adopters, as does a fresh look at any net metering plan that a utility sees as harming its long‐term energy credits (RECs), there is growing recognition interests. that buying renewable power in a way that adds Utilities could also partner with city or state governments to offer renewable energy as part of
20 Reuters, “Apple, Facebook, Google Internet Data Centers 21 James Glanz, “Power, Pollution, and the Internet,” The New Getting Greener, Report Finds,” Fox Business (April 2, 2014), York Times (September 22, 2012), http://www.foxbusiness.com/industries/2014/04/02/apple‐ http://www.nytimes.com/2012/09/23/technology/data‐centers‐ facebook‐google‐internet‐data‐centers‐getting‐greener‐report‐ waste‐vast‐amounts‐of‐energy‐belying‐industry‐ finds‐806649195/ image.html?pagewanted=all&_r=0
22 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW economic development efforts to attract greater collaboration, as well as greater competition investment. Tesla has announced that its battery among utilities, IPPs, and commercial/industrial factory, planned to be the largest in the world, will users, are surely coming. be powered by renewable energy. The factory’s site has yet to be selected, and several states are vying ABOUT THE AUTHOR for the investment. It is possible that an enterprising Shalini Ramanathan is VP Origination for RES utility will offer to procure renewable energy at a Americas, a leading developer and constructor of low, fixed price as part of a broader effort to attract utility‐scale wind and solar projects. Ms. Tesla’s investment. The same dynamic could hold for Ramanathan has closed multiple deals with nearly car companies, large data centers, or any other $2B in total transaction value. She currently leads source of new load and investment. the company’s efforts in securing renewable power Finally, some utilities (with their regulators’ and renewable project sales opportunities and approval) may decide to own projects that supply previously led South Central development efforts. renewable power to commercial and industrial users Prior to joining RES Americas, Ms. Ramanathan was for the benefits they provide. Putting projects in a based in Nairobi, Kenya and worked on renewable utility’s rate base would allow it to earn a regulated energy projects across East Africa for the British rate of return while protecting market share. Utilities company CAMCO. She previously worked for the wishing to do this will have to convince their National Renewable Energy Lab (NREL). regulators that potential increases in the cost of power for all users are justified to avoid the loss of She holds a Master’s degree in Environmental customers, which in itself could lead to higher rates Management from Yale University and a BA from UT for those not opting to secure their own renewable Austin. She serves on the Board of Directors of power. CleanTX, which promotes and supports the clean energy economy in Central Texas. We are in the early days of bulk power users procuring their own power. More innovation and
23 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
MARKET SPOTLIGHT: GRID INTEGRATION CHALLENGES AND THE ROLE OF CONCENTRATING SOLAR POWER
Frank (Tex) Wilkins, Arthur Haubenstock, Kate Maracas, and Fred Morse Concentrating Solar Power Alliance, Perkins Coie LLP, and Abengoa Solar
Concentrating solar power (CSP) with thermal means CSP is dispatchable—i.e., able to provide or energy storage (TES) can address mounting withhold power as needed by the grid, thereby problems associated with integrating renewable enabling the grid to absorb more renewables that power into the grid, enabling renewable resources’ are less flexible. share of the energy supply to grow while maintaining grid reliability. Growing concerns about Of the multiple technologies that comprise CSP, two over‐generation (projected to increase exponentially are now being commercialized: parabolic troughs as renewables approach 50% of the energy supply) and power towers. The most recent CSP+TES plant in and solar and wind variability can be mitigated by the U.S. is the 280 MW Solana parabolic trough CSP with storage. CSP with storage acts as a catalyst, facility, in Gila Bend, Arizona. Solana has six hours of allowing increased solar and wind without adding storage, allowing it to convert heat stored in molten carbon or other emissions associated with the salt form to electricity at any time, day or night. On a “peakers” that might otherwise be needed for typical summer day, for example, Arizona Public reliability – while providing substantial quantities of Service (APS) could dispatch Solana to generate clean power. electricity for up to six hours after the sun goes down, to supply air conditioning demand through a BACKGROUND warm evening. On a cold winter day, APS could dispatch Solana to start operating at 4 am, provide CSP uses mirrors to concentrate sunlight on a electricity until the end of the morning peak, then receiver, heating fluids to upwards of 1,000°F or come back on line for the evening peak. more. The heated fluid can either produce steam immediately, driving turbines just like those in fossil‐ As with conventional energy resources, the market fueled plants to produce electricity, or the heated for CSP and other renewable energy resources is fluid can be stored to generate power at a later time. driven, in part, by government policies. While these The ability to store and produce energy at any time policies have been successful in encouraging private sector investment and deployment, reliability and cost issues have arisen due to lack of attention to the need to procure a balanced mix of diverse resources as renewables’ share of the energy supply increases. Germany, with the world’s highest renewable energy levels, Solana, Gila Bend, AZ, Source: Abengoa is going through “the worst structural crisis in
24 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW the history of energy supply," according to Peter the net demand (load) that CAISO must meet after Terium, CEO of RWE, the country’s second largest wind and solar power is added to the grid. In the utility.22 Similar concerns have echoed in Italy, middle of the day, generation could exceed demand; Spain, and elsewhere in Europe.” Here in the U.S., when the sun goes down and nondispatchable solar California has made remarkable progress towards its wanes, the net evening peak soars, causing a 33% renewables portfolio standard (RPS) while particularly severe upward ramp rate. Recent maintaining reliability and minimizing cost increases, analysis by Energy + Environmental Economics (E3) in part due to the grid flexibility provided by its concludes that over‐generation will be the largest hydropower and its mild climate.23 Nonetheless, renewable energy integration challenge, estimating similar issues to those experienced in Europe are that “over‐generation will increase exponentially at beginning to emerge; to maintain an affordable, RPS levels approaching 50%.”24 Over‐generation reliable grid as renewables increase, their lessons would require generators to reduce (curtail) output, must not be ignored. reducing their income and becoming an economic threat to them. While some suggest the “duck Governments promote renewable energy to achieve curve” and the E3 conclusions represent worst‐case several important objectives: energy security, scenarios, the seriousness of the risks they portray improved air quality, and climate protection. To are widely recognized. meet these objectives, while maintaining grid reliability and minimizing undue costs, a diverse Generation resources called “peakers” have portfolio of renewables that collectively support grid traditionally provided the precise, continuous needs is vital. balance between supply and demand needed for grid reliability. Within this decade, increased INTEGRATION OF RENEWABLE ENERGY renewables would require peakers to operate at or near their reliability thresholds, and to ramp up and The grid is a highly complex system. As renewable down at rates that may be difficult to achieve— portfolio standards increase, several grid‐related concerns emerge, including over‐ generation (which can destroy key grid elements), fluctuations in power, lack of predictability, and steep ramp rates (i.e., the rate at which the net power load changes).
Figure 1, sometimes called the “duck curve”, portrays the California Independent System Operator’s (CAISO) projection of grid requirements as California approaches its 33% RPS. It shows Source: CAISO
22Steitz, “Germany's utilities struggle to adapt to renewable http://www.cpuc.ca.gov/NR/rdonlyres/F39A3D4C‐6EE9‐48AA‐ revolution,” (Reuters Feb. 3, 2014), available at A0C9‐03D6A3B3EF38/0/Section_399_19_Report_FINAL.pdf http://www.reuters.com/article/2014/02/03/uk‐germany‐ 24 Investigating a Higher Renewables Portfolio Standard in utilities‐idUKLNEA1200D20140203 California, Energy and Environmental Economics, Inc., January 23 California Public Utilities Commission, “Biennial RPS Program 2014, available at Update,” (Feb. 2014), available at https://ethree.com/documents/E3_Final_RPS_Report_2014_01_0 6_with_appendices.pdf
25 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW increasing their emissions, as well as their costs. For conclusion, estimating the range of additional value example, the highest average ramp rate in California of CSP+TES as $0.03 to $0.04/kWh.28 Notably, these is presently about 30 MW per minute. By 2020, it is studies focus only on the flexible reliability benefits estimated to be three times higher.25 These that are most critical as RPS targets increase; they do challenges may increase as intermittent renewable not attempt to calculate the value of the other grid levels increase, and threaten to undermine benefits CSP+TES provides. renewable policy objectives – and erode public support for these policies. CSP+TES can mitigate In a further report, NREL provided additional these problems while decreasing emissions. analyses of CSP+TES’ ability to address emerging changes to the energy load curves.29 Like the E3 CSP ENABLING HIGHER RPS LEVELS report, NREL found that marginal curtailment increased rapidly after threshold levels of The Regulatory Assistance Project (RAP) takes a nondispatchable solar were added to the grid; 26 positive outlook on high renewable penetration, however, it also found that adding CSP+TES can indicating CSP+TES, along with other clean energy significantly decrease curtailment, increasing the resources — such as electrical storage, demand effectiveness of the nondispatchable solar. response, and energy efficiency — can cost‐ effectively address grid reliability concerns. NREL’s chart (on the previous page) shows how CSP and PV complement one another. NREL’s projection CSP+TES offers essentially all the electric power shows three curtailment rates: for PV alone, PV plus products and services provided by fossil‐fueled CSP+TES, and PV plus CSP+TES assuming CSP+TES is plants, without their carbon and other emissions. not dispatched to provide the flexibility benefits it CSP+TES provides capacity and operational could offer. The red “PV” curve shows significant attributes the grid needs as renewables increase, curtailment once PV reaches ~14% of grid power such as fast‐ramp rates that can be sustained for (the projected PV level for California’s 33% RPS). The multiple hours. As a synchronous, steam‐cycle green “PV plus CSP” curve shows curtailment resource, it can provide regulation services that decreases when PV and CSP provide power during “shore up” intermittent generation resources, while contributing carbon‐free energy. CSP+TES also provides other vital grid services such as voltage support, frequency response, spinning and non‐ spinning reserves.
CSP’s ability to store energy adds flexibility to the grid. Several studies quantify the comparative value of power from CSP+TES. Lawrence Berkeley National Laboratory estimates CSP+TES with six hours of storage would provide $0.035/kWh more value than 27 solar without storage. The National Renewable Source: NREL Energy Laboratory (NREL) came to a similar
25 Flexible Supply and Renewable Energy: Solar and the Impact on Penetration Levels: Pilot Case Study of California, Mills, A., and R. Load Curves, Mark Rothleder, August 2013, available at Wiser, June 2012b, LBNL‐5445E (at 10% solar penetration) http://www.epri.com/About‐ 28 A Preliminary Analysis of Concentrating Solar Power with Us/Documents/Summer%20Seminar%20Presentations/3.2_Rothl Thermal Energy Storage in a CAISO 33% RPS Scenario, Denholm, eder_CAISO_FINAL.pdf P., et al, March 2013, NREL/TP‐6A20‐58186 26Available at http://www.raponline.org/featured‐work/teach‐ 29 Enabling Greater Penetration of Solar Power via the Use of CSP the‐duck‐to‐fly‐integrating‐renewable‐energy with Thermal Energy Storage, Denholm, P., Mehos, M., NREL/TP‐ 27 Changes in the Economic Value of Variable Generation at High 6A20‐52978, November 2011
26 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW the day and CSP provides additional morning and ABOUT THE AUTHORS evening power to reduce some curtailment. The white curve shows the impact of CSP+TES when it Frank (Tex) Wilkins is Executive Director of the provides additional flexibility in the form of higher Concentrating Solar Power Alliance. Tex previously turndown.30 More analysis is needed, but this study led DOE’s CSP, Solar Industrial, and Solar Buildings suggests high renewable portfolio standards can be Programs. He holds degrees in mechanical implemented without loss of grid reliability when engineering from the University of Maryland. Arthur CSP+TES is added to the portfolio. Haubenstock is senior counsel in Perkins Coie’s Environment, Energy & Resources practice. Arthur CONCLUSION previously held senior positions with BrightSource Energy and PG&E. He holds a J.D. from Georgetown Current approaches to procuring renewable energy University and a B.A. from Wesleyan University. Kate could lead to an unnecessarily unstable grid and Maracas is an energy consultant, was Vice President increased costs, ultimately stunting renewable of Development for Abengoa Solar, and has practiced energy growth. CSP+TES could provide a cost‐ in the energy sector for over 30 years. Kate holds effective means to increase renewables penetration degrees from Thunderbird Graduate School and while maintaining a stable grid. A revised Arizona State University. Fred Morse is Senior procurement process, intentionally targeted to Advisor of US Operations for Abengoa Solar. Fred achieve a least‐cost, least‐emissions and reliable previously served as Executive Director of the White grid, would enable CSP+TES and other solutions to House Assessment of Solar Energy and Director of contribute to a clean energy future. DOE’s Solar Heat program. Dr. Morse holds a B.S. from RPI, an M.S. from MIT, and a PhD from Stanford.
30 “Turndown” refers to the operation of a power plant below its plants, on the other hand, are designed to operate at partial load. rated capacity. Coal and nuclear plants have historically been In this report, NREL assumed CSP plants could operate as low as designed to provide baseload power. They operate at least cost 20% rated capacity (a turndown factor of 5) and that coal and and highest efficiency when at full capacity. They can, however, nuclear plants could operate as low as 50% rated capacity (a operate at partial load although doing so accelerates damage. CSP turndown factor of 2).
27 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
MARKET SPOTLIGHT: ELECTRIC VEHICLES: FLEXIBILITY, CREATIVITY, AND PROFIT POTENTIAL FOR UTILITIES
Chris King Siemens Smart Grid Services
Utilities need greater flexibility in order to survive resources — would predictably crest in the hours and thrive in a radically shifting energy landscape. As before and after this peak. Back then, utilities would vastly more renewable resources have been added ramp up production from conventional power plants to the grid (and even more are poised to come to meet most of this demand, because contributions online), utilities are racing to adapt their operations from renewables were relatively modest. to peak demand patterns, which have significantly changed in just the last two years. However, as more renewable resources are being added to the grid, this picture is becoming inverted. Electric vehicles (EVs) represent one of the greatest In particular, solar power production peaks from opportunities on this front. EVs can help utilities mid‐morning through the afternoon. As solar energy enhance reliability, implement demand response, becomes more common, there may be too much and even develop new revenue streams — all while grid power availability in the afternoon and may be meeting crucial consumer transportation needs, and not enough shortly after sunset. also while helping the environment. Pilot programs and EV research in the U.S. and elsewhere are demonstrating this value and yielding practical lessons for large‐scale EV deployment and vehicle‐ to‐grid strategies. EVs also are crucial to developing a network of microgrids to enhance reliability and manage demand.
Utilities and regulators can work together to realize the full potential of EVs in the smart grid. Third‐party providers of charging‐station infrastructure also have an important role to play in expanding consumer EV adoption. Together, these stakeholders can build a more resilient energy system in the U.S. and around the world. Above: The “duck curve,” updated March 2014 based on actual system data, shows that in the last two years peak demand THE EVOLVING SYSTEM PEAK: EVS FOR trends have shifted radically in California, largely due to the DEMAND RESPONSE impact of a significant increase in renewable generation. Source: Courtesy California ISO Peak demand is not what it once was. Traditionally, system demand would peak during hot summer Data from the California ISO31 shows the first afternoons, and net load — actual demand on the appearance of this shift in 2013, and it has quickly system minus generation from variable renewable grown more pronounced to date. Projecting ahead,
31 Demand Response and Energy Efficiency Roadmap: Maximizing December 2013, p. 7 (“The Duck Curve”): Preferred Resources. California Independent System Operator, http://www.caiso.com/Documents/DR‐EERoadmap.pdf
28 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW by 2020, this trend could yield costly and risky spikes residents in the state have signed up for these rates. and troughs in net load — which system operators It is unknown how many residents also own EVs, but would struggle to address through conventional those who do could easily save money by charging means. such a significant load during off‐peak times.
The grid needs to be far more flexible, mostly on the EVS IN THE REAL WORLD: PILOT PROGRAMS demand side, in order to respond to such growing 33 fluctuations in available power. Widely deployed EVs Recently, in Denmark, the EDISON pilot project can supply much of this flexibility. EVs can help demonstrated that EVs can function on a large scale, minimize the need to build new power plants, yielding practical lessons and technical advances. In enhance large‐scale demand response, and this project, the local utility managed the distributed ultimately even reduce wholesale power prices. resource of a fleet of EVs (driven by residents on the Danish island of Bornholm) as a single virtual power As long as an EV is plugged in, it can be charged at plant. This program explored demand response any time — especially during off‐peak hours. Also, strategies (including the impact of TOU rates) and the car’s battery could be used as a power resource options for charging station infrastructure. It also by utilities during times of lower power availability, evaluated the utility business case for EVs.34 or for emergency home power during outages. And all of this can be achieved without sacrificing the The U.S. Department of Defense (DoD) is piloting an paramount consumer priority of on‐demand extensive program with plug‐in EVs, in cooperation transportation. with local utilities and independent system operators serving six military bases. DoD is using Price signals, such as time‐of‐use (TOU) rates, are fleet management software as a primary interface the key to tapping EVs as a flexible grid resource. for monitoring and managing EVs as a resource. The Right now, TOU rates are not available to most U.S. software dispatches charging signals from the local consumers — but with stronger regulatory support, utility or system operator to charging stations, to they could be. optimize vehicle charging patterns. Sometimes, the EVs feed power into the grid through vehicle to grid The potential for price signals to help address many (V2G) technology. According to DoD, V2G strategies of the most pressing challenges facing power are “an essential element to satisfy financial systems is one of the most intriguing opportunities constraints on our fleet electrification efforts.”35 that regulators can explore, and with which utilities can experiment. Consumers are already using smart In another project, researchers evaluated the thermostats to respond to price signals – and some economic potential of two utility‐owned EV fleets are translating this to EVs, where EV TOU rates are and found that “V2G power could provide a available. significant revenue stream that would improve the economics of grid‐connected electric‐drive vehicles For instance, for several years now, Commonwealth and further encourage their adoption. It would also Edison and Ameren32 have offered the option for improve the stability of the electrical grid.” 36 their Illinois customers to sign up for real‐time market pricing for electricity. So far, about 10,000
32 Illinois residential real time pricing programs at Commonwealth 35 U.S. Dept. of Defense, Plug‐in Electric Vehicle Program. Edison and Ameren, an overview by Plug In Illinois: Overview presentation, 2013: http://www.pluginillinois.org/realtime.aspx http://sites.ieee.org/isgt/files/2013/03/Camron5C.pdf 33 EDISON project executive summary. Danish Energy Association, 36 “Using fleets of electric‐drive vehicles for grid support,”eby July 2013: http://www.edison‐ Jasna Tomic and Willett Kempton, University of Delaware. Journal net.dk/Project%20Details/Executive%20Summary.aspx of Power Sources vol. 168, 2007: 34 “Case study: Electric vehicles using sustainable energy and open http://www.rmi.org/Content/Files/Fleetsforgridsupport.pdf networks ‐‐ the EDISON project.” E‐Business W@tch, 2009.
29 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
Furthermore, this research reveals that larger overall EV energy consumption. This can be used in profits were yielded when utilities could sell power calculator apps to help consumers understand the from EVs back to the wholesale market when prices value of EVs and make smart decisions to save, or were high, sharing the benefits with EV owners. perhaps even make, money. In Michigan, Consumers Power39 has such a calculator, and PEV4me40 created THE FUTURE OF EVS IN THE U.S. one that uses Green Button data.
Charging station infrastructure still needs to be EVS FOR RELIABILITY: MICROGRIDS substantially built out in order to support U.S. consumer adoption of EVs at a scale that would When a home or business has solar panels, EVs, and enable powerful demand response. This includes charging stations, they can be used together to public charging stations (either utility‐owned, or function as a microgrid. A microgrid is an electrical operated through third‐party partners such as system that includes multiple loads and distributed ChargePoint37) as well as on‐premise charging energy resources – both generation and storage – stations at homes and businesses. Developing more that can be operated in parallel with the broader charging infrastructure is a significant investment, utility grid or as an electrical island. This combination but it also represents a significant long‐term revenue of technologies can even help prevent outages by opportunity for utilities. providing flexibility to quickly shift large loads in times of grid stress, and generally maintain grid In Foster City, California, a ChargePoint station was balance. installed at the headquarters of eMeter, a Siemens Business. Employees use it on a first‐come, first The solar panels produce power during the day, served basis. Some employees own EVs, and eMeter storing excess production in the EV batteries, which, also owns a Nissan Leaf EV. Having this charging in turn, provide power to the home at night. station at the office is not merely an employment perk for eMeter staff; it also means more revenue To make this reliability strategy work, there must be for local utility Pacific Gas & Electric. a safe way to disconnect the home from the grid because it would create a significant hazard to Most home‐charging stations use a standard 220 power a house from the battery while it is also circuit, just like what is needed for an electric clothes connected to grid power. dryer or residential air conditioning unit. Third‐party charging station providers typically provide their In the event of an outage, control at the home’s own TOU pricing to customers. Utilities commonly smart meter — provided automatically by demand assist with, or at least promote, the installation of response management software, as well as by a charging stations due to their revenue‐generating manual switch — could disconnect the home from potential. Sometimes permitting for charging the grid and activate the local microgrid. The meter stations can be a hurdle, but usually this can be would also sense when grid power is restored, easily addressed. deactivate the microgrid, and reconnect the home to the grid. This concept is relatively simple, but this The Green Button38 energy data standard allows U.S. strategy still needs to be tested through pilot consumers to download their energy data, including projects.
37 ChargePoint EV charging station provider: http://www.consumersenergy.com/apps/pev/index.aspx?ekfrm= http://www.chargepoint.com 3751 38 Green Button energy data standard info: 40 Plug In Electric Vehicle for Me savings calculator: http://www.greenbuttondata.org http://www.pev4me.com. This project was a finalist in the U.S. 39 Plug‐In Electric Vehicle interactive calculator, by Consumers Dept. of Energy 751x?ekfrm=3751" gan: 2013: project.bcontest. Power, Michigan:
30 American Council On Renewable Energy (ACORE) EVOLVING BUSINESS MODELS FOR RENEWABLE ENERGY: 2014 INDUSTRY REVIEW
CONCLUSION ABOUT THE AUTHOR
Though the market is still in its infancy, consumers Chris King is Global Chief Regulatory Officer for are buying more EVs at an ever‐increasing rate. Siemens Smart Grid Services. An internationally recognized authority on energy regulation and Forward‐thinking utilities and regulators are already competitive energy markets, Chris is widely recruited getting ahead of this trend with pilot programs and by regulators and legislators to consult on innovative rates. Smart grid technology and software technology issues in electric restructuring, smart allow EVs to be managed as a coherent yet flexible meters, and grid management. He has testified grid resource. before the U.S. Congress and was instrumental in crafting the Energy Policy Act of 2005 that paved the Investments in EVs and their associated way for advanced metering and Smart Grid infrastructure are likely to do more than just help initiatives in the USA. He chairs the Brussels‐based utilities stay competitive. They are likely to yield Smart Energy Demand Coalition and the Silicon considerable returns, while also giving consumers Valley Leadership Group Energy Committee, and is valuable options and peace of mind, and while on the Executive Board of the Demand Response and addressing environmental concerns. Smart Grid Coalition. Chris also was one of the The best part about deploying such a flexible founders of eMeter, now a Siemens Business, focused resource as EVs is that it can be used creatively. It is on smart meter data management and applications. likely that even more powerful and profitable V2G strategies remain to be discovered.
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32 American Council On Renewable Energy (ACORE)